Arweave Evolved From Data Storage to L1 Host: What’s Next for $AR?

Decentralized storage network Arweave (AR) has outperformed the majority of the top 100 cryptocurrencies in 2024.

The AR token has posted a year-to-date (YTD) gain of over 300% as of May 7, 2024.

Arweave’s evolution from a simple data storage layer to potentially hosting a “hyper-parallel” layer one blockchain on top of it has enthralled crypto investors.

So, what is the hype around Arweave? In this article, we analyze Arweave and the AR token.

Table of Contents Table of Contents

1. Key Takeaways
2. What Is Arweave?
3. Understanding Permaweb
4. Tokenomics of AR token
5. Arweave’s AO Computer Excites the Crypto Market
6. Arweave Price Action: Outperformance in 2024
7. Analyst Views: AI Play, Ethereum Competition & Whale Concerns
8. The Bottom line
9. FAQs
10. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. What Is Arweave?
3. Understanding Permaweb
Show Full Guide
4. Tokenomics of AR token
5. Arweave’s AO Computer Excites the Crypto Market
6. Arweave Price Action: Outperformance in 2024
7. Analyst Views: AI Play, Ethereum Competition & Whale Concerns
8. The Bottom line
9. FAQs
10. References

What Is Arweave?

Arweave is a decentralized network that uses blockchain technology to offer permanent data storage services in a censorship-resistant manner.

The network was founded in 2017 by Sam Williams and William Jones as “Archain.”

According to Arweave’s whitepaper, the network is designed to store data for the “maximum possible term without change.” In order to offer immutable data storage, Arweave brings together a global network of computers (a.k.a nodes) that collectively store multiple copies of all data uploaded to Arweave.

Users pay a one-time upfront fee to upload data to the system. Arweave’s network of nodes verifies the data and reaches a consensus on the new data to be added to the latest block.

Users need to set up native Arweave wallets like – ArConnect and Arweave Wallet – to use the Arweave blockchain.

Understanding Permaweb

Arweave is not just a data storage system. The network aims to power “the next evolution of the web” called “permaweb” using its decentralized and permanent data storage system as the foundation.

Permaweb is a permanent and decentralized web hosted on Arweave.

According to Arweave, the current version of the internet has no memory. Oftentimes, web pages are lost when removed from one server, while applications become unavailable when developers remove or change them.

Arweave provides a full-stack solution for building decentralized permaweb applications, from web hosting to database querying and domain name services to smart contract development.

Additionally, Arweave also allows users to create profit-sharing tokens that share proceeds of any revenue stream on the permaweb with its community.

Permanence = Provenance.#Arweave creates an environment where files cannot be arbitrarily removed.

Track the history of a document or a web page, with no link rot or missing data.

A tamper-proof history of all our most important information. pic.twitter.com/fDxGQDClVX

— Only Arweave (@onlyarweave) April 8, 2024

Tokenomics of AR token

The AR token is the native token of Arweave. The Arweave crypto is used for two functions – data storage payments and miner rewards.

According to Arweave’s yellow paper, 55 million AR tokens were created at genesis on June 8, 2018.

An additional 11 million AR tokens (equal to 20% of the initial supply) will be added to circulation via block mining rewards.

The max supply of AR tokens is capped at 66 million tokens.

As of May 7, 2024, 99.2% of max AR supply was in circulation, CoinMarketCap data showed.

At the time of writing, Arweave’s token price stood at $39.8, making it the 43rd most valuable crypto in the world, with a market cap of $2.6 billion.

Arweave’s AO Computer Excites the Crypto Market

Let’s start with the biggest Arweave news of 2024.

In February 2024, Arweave announced the launch of a decentralized computation platform called AO Computer.

AO Computer aims to compete with existing smart contract platforms such as Ethereum (ETH) and Solana (SOL). Parallel processing is one of the key features of AO which allows it to run any number of processes in parallel at the same time. Therefore, AO calls itself “the hyper-parallel computer.”

The hyper parallel computer launches right now. pic.twitter.com/Gyf5F00VYm

— ao (@aoTheComputer) February 27, 2024

AO Computer is built on top of Arweave allowing smart contracts to load data and write data directly into Arweave.

Furthermore, the modular architecture of AO allows existing smart contract systems to seamlessly plug into AO and interact with the Arweave ecosystem.

As of May 7, 2024, AO Computer is currently in testnet.

When users interact with processes, ao nodes go through this log of state messages stored on Arweave, and compute the result.

This is one way how ao manages to be so scalable – messages are stored on Arweave, and state does not need to be computed globally with each update.

— Only Arweave (@onlyarweave) May 3, 2024

Other notable Arweave news include:

• Stablecoin on Arweave – In April 2024, Astro protocol announced the public launch of its testnet which introduced a stablecoin called USDA on Arweave.
• Ecosystem fund – An Arweave ecosystem fund called ao Venture was established on April 11, 2024, with over $35 million in initial capital.
• Interchain bridge launch – Arweave announced the launch of a bridge called AOX, which will allow users to transfer AR and other tokens in and out of ao computer.
• Coinbase futures – In May 2024, Coinbase announced the launch of Arweave perpetual futures on Coinbase International Exchange and Coinbase Advanced.

Arweave Price Action: Outperformance in 2024

As of May 7, 2024, the Arweave token was among the best-performing tokens among the top 100 cryptocurrencies in 2024.

The AR token has posted a year-to-date (YTD) gain of over 300%, which was bested only by Dogwifhat (WIF), Pepe (PEPE), Floki (FLOKI), Nervos (CKB) and Pendle (PENDLE).

The majority of the AR price surge came in the month of February 2024, when the token rose 216%, buoyed by the AO computer launch announcement.

The AR token extended its gains into March 2024 to peak at a near two-year high of $45.56 on March 9, 2024.

In April 2024, the AR token rally cooled in line with weakness in the broader crypto market. However, in early May 2024, the AR token staged a comeback, gaining over 20% on May 2, 2024, after Coinbase announced the launch of Arweave perpetual futures.

Analyst Views: AI Play, Ethereum Competition & Whale Concerns

Is Big Arweave Announcement Coming Soon?

In a report, research firm Revelo Intel said Arweave has evolved beyond storage solutions and is now venturing into the AI narrative.

Revelo Intel stated:

“The latest initiative, the AO Hyper Parallel Computer, attempts to solve the challenge of achieving infinite scalability and incubate an ecosystem of projects that can support multiple high-growth market sectors, such as AI, DePIN, autonomous agents, etc.”

Revelo Intel told readers that it expected “to see another large catalyst coming in the near term,” citing a cryptic tweet from Arweave founder Sam William, which said that his team focuses on “two major works,” including AO Computer.

During the bear market, @fwdresearch focused on two major works. Last month we launched the first, @aoTheComputer.

Launch for the second is now on the horizon. Can’t wait to share it with you.

The new cyberspace will be built on Arweave. https://t.co/OjeATwSRep

— 🐘🔗 sam.arweave.dev (@samecwilliams) March 29, 2024

“Considering that Arweave can now be categorized as an AI project, it would be very opportunistic to release the announcement coinciding with NVIDIA’s earnings on May 22,” said Revelo Intel.

Endgame for Data Storage

Sami Kassab of Messari and Salvador Gala of EV3Ventures wrote that the decentralized data storage sector has been “slow to play out” but “seems like an obvious use case for crypto.”

“The end-game for storage has always been about compute-over-data,” wrote the duo.

Arweave has done exactly that in 2024 with the launch of the AO Computer. Now, Arweave has its sights set on competing with established rivals.

Rohit Pathare of Community Labs wrote in a blog post:

“Unlike networks such as Ethereum, where the foundational layer and each rollup effectively function as a singular process, ao supports an arbitrary number of processes running in parallel, while ensuring the verifiability of computations remains intact.”

“While some decentralized networks like Akash and peer-to-peer systems like Urbit do provide compute at scale, unlike ao, they do not provide verifiable reproducibility for their interactions or have relied on impermanent storage solutions for their interaction logs,” added Pathare.

AR Whale Concern

On Reddit, a pseudonymous Arweave community member expressed their concern over Arweave’s whale concentration.

As of May 7, 2024, on-chain data compiled by block explorer ViewBlock showed that the top holder of AR tokens was Binance’s custody wallet with over 12.68 million AR tokens.

However, the next four top AR-holding wallets were unidentified. They had cumulatively executed 237 transactions in their history compared to over 90,000 transactions executed by the Binance-linked wallet.

The above-mentioned four wallets cumulatively held over 15.8 million AR tokens or 24% of the maximum AR supply of 66 million tokens.

The Bottom line

Arweave is an interesting blockchain project that has evolved over the years to become more than just a decentralized storage play.

The Arweave community is eagerly awaiting the mainnet launch of the AO Computer, which will showcase Arweave’s full potential.

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